Aside from food, most people use three types of energy. First and foremost is electricity: it is the most versatile and therefore generally the most valuable. It powers homes, office buildings, subways and much more. Second, petroleum—mostly in the form of gasoline, with considerable amounts of diesel. We use petroleum mostly for transportation. And third, natural gas for heating and cooling. What does a kilowatt-hour of each type of energy cost?
Good question, and the answer varies depending on the fuel and where you get it. I’ll use my hometown of Ottawa Ontario as an example.
Electricity. The price of a kilowatt-hour of electricity in Ottawa is, according to my most recent bill, 18.95 cents. I got that figure by dividing my total amount owing, $60.87 (including tax), by the number of kWhs the bill says I used, 321.19.
The price of a kWh of electricity in eastern Muskoka, where my cottage is, is 29.5 cents per kWh (based on 945 kWh used over three months last summer; total owing was $279.49). Yes—same product, from the same electricity grid and same generation sources, but it costs 55 percent more in eastern Muskoka—poortown Ontario—than it does in relatively affluent Ottawa. I will take that issue up in a minute.
Gasoline. I just put 42.5 litres of gasoline into my car at the Shell on the west side of Merivale half a kilometer south of Baseline, and it cost 93.9 cents per litre. A litre of gasoline contains roughly 8.9 kilowatt-hours of energy, so you could say that each kWh of gasoline energy cost me roughly 10.5 cents. Six months ago, I was paying $1.30 per litre—14.6 cents. (To determine the cost of a kWh of gasoline energy, divide the per-litre price by 8.9 kWh.)
Natural gas (a.k.a methane). In Canada, natural gas is sold at the retail level by the cubic meter. A cubic meter of natural gas contains roughly 10 kWh of energy. According to an Enbridge bill covering November 2014, an Ottawa residential customer who had used 246 m3 was billed $94.04 all-in including tax. That works out to 3.8 cents per kWh (2246 kWh divided by $94.04.)
Here is a chart that lays this out:
And here is is the data on which the chart is based:
|Enbridge||Hydro Ottawa||Hydro One||Shell|
|m3 or litres||246||–||–||1|
What jumps out? Immediately, you see that the cheapest fuels, natural gas and gasoline, are also the dirtiest. Natural gas costs 3.82 cents per kWh and its CIPK is 187.9 grams; gasoline costs 10.5 cents per kWh and its CIPK is 258.4 grams. Electricity, nearly four times cleaner than natural gas, cost nearly five times as much as natural gas in Ottawa, and nearly 8 times as much in eastern Muskoka.
I know a guy in eastern Muskoka who has gone completely off the electricity grid. This is not because he is some sort of anti-grid “sustainability” fanatic. Nor is he a “FIT-trepreneur”—a wind/solar proponent who fancies himself a fearless entrepreneur but in reality is paid by the government, with money taken from the pool of electricity customers in Ontario, to install wind turbines or solar panels on his property, and whose profit is guaranteed through artificially high electricity rates, paid by the same customers. FIT-trepreneurs are not off-grid—the whole scheme depends on them being on-grid.
No, this fellow has gone off the grid because he simply can no longer afford the extremely high cost of electrical energy in that part of the province—nearly 30 cents per kWh, as you can see in the table above. He now lights his place with electricity from solar panels, and heats and cooks with wood. He has to be positively miserly with the amount of electric light he uses: solar energy, as I have explained in previous posts, is about the least efficient way to make electricity. So his solar panels don’t provide much energy.
And what is the cost of a kWh of energy from wood combustion? It depends on how you value the labour of the person who fells, transports, saws, and splits the wood. I have personally done all four of these activities, and I can tell you from personal experience that they can be fun to do when you are being a man in the great outdoors. But that cachet wears off after a couple of days—to get all your heat from wood that you fell, transport, saw, and split yourself, well that is a lot of work. And though the market does not pay all that much for firewood, I value my own labour quite highly. It is my body and my time. I am sure my Muskoka neighbour feels the same way about his own labour. But he has to contend with the market, and that market has priced him out of electric power from the grid.
And to add insult to injury, the Ontario electricity “market” is a market in name only. Prices in Ontario electricity are fixed, by the government. And the government has been persuaded by environmentalists to slap high prices on electricity. Ontario electricity used to be priced on a power-at-cost basis, which meant essentially that urban rate payers paid slightly above cost, and rural customers paid at cost. This was because urban customers are more plentiful and relatively more affluent; rural customers are scarce and relatively poor. So urbanites could afford to pay slightly above cost, in order to have the rural parts of the province electrified.
But the power-at-cost ethos has been turned on its head. Today, rural customers pay rates far above what urbanites pay. And because urbanites themselves are forced pay far-above-market rates to guarantee the profits of private-sector wind and solar “entrepreneurs,” the general price of electricity is high all over the province.
Hence the high prices for electrical energy shown in the table above, relative to the prices for heat and transportation energy.
The kicker is, electricity used to be cheap. It was almost always much cleaner, kilowatt-hour for kilowatt-hour, than natural gas and gasoline.
But we have now deliberately made it more expensive. So, those who can choose their fuels, do so. And they choose natural gas, which though nearly five times as carbon-intensive as electricity, costs one-fifth what electricity does.
And those for whom gas is not available… well, they choose wood. The dirtiest fuel of them all.